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Online Marketing
Vince Kellen

Some big caveats:

Some big caveats The internet is new (relative to other technologies)
Marketing and advertising is very new (first banner ad in 1994)
The internet is growing rapidly
Marketing approaches from radio, TV and print are being applied to the internet
The rules are changing
Behavior is changing
The internet user population is changing
What works today probably won’t work tomorrow!

Online Marketing ROI Objectives:

Brand building:

Brand building A brand is a set of differentiating promises that link a product or service with its customers (Stuart Agres, VP, Young & Rubicam, as reported in the Industry Standard)
Interactivity of the web means that users interact with brand more intimately than ever before
Brands are old
Brands exist in the minds of consumers
While the debate rages about whether brands are important or not, clearly more and more people will interact with brands online (Jupiter Communications says 16 million households by 2002)
Brand advertising, more than a call to action, banner ads, etc., needs a sustainable visual burned into the consumers’ subconscious

Brand building:

Brand building Studies show the brand value of an internet banner ad is greater than the value of the click through (1997 IAB Online Advertising Effectiveness Study)
Increases in bandwidth and rich media will drive increases in brand advertising, or so some say
However, delivering the brand promise is all important too!
Peopod, best known online grocery brand, stock and financial performance have been hurt as company lost site of consumer needs (“Brands Aren’t Everything,” Evan I Schwartz, Industry Standard)
However, delivering the brand promise is all important too!

Problems with online brand ads:

Problems with online brand ads Small banner space can’t compete with TV richness
Click through rates, introduced in 1994 at www.wired.com, averaged 2% in 1997 now hover at .5%. Users are ignoring banner ads
Offline brand advertising works because of the distance between ad and sale. With one-click buying one-click away is the same true online?
Online is changing to make purchases available in the banner
Online brand advertising is $3 billion (Jupiter and Forrester)
TV ads promoting web sites: $3.5 billion
Smart money is looking offline for brand advertising
5 years from now, the Internet will be another channel to take into consideration as companies optimize their mix
Dylan Tweney, Infoworld, October 4, 1999

Direct Marketing:

Direct Marketing Web’s self selecting nature means that web surfer’s are more educated and have higher average household incomes
Real-time targeted marketing using technology (collaborative filtering, neural nets, rule based systems) becomes possible
Service providers for targeted banner ads (e.g., www.DoubleClick.com) provide targeted
Matching ads with editorial becomes possible (think of the newspaper equivalent)
Direct Marketing and Brand Building are complimentary
Who clicked? What do we know about them? How do you track a click through to a sale across time?

Marketing pyramid:

Marketing pyramid

Marketing pyramid:

Marketing pyramid How many and what kind of impressions/interactions do you need at one level to move someone to the next level?
How many banner ad impressions yield a click to your site?
How many visits to a site yield a purchase?
How many purchases (or interactions) yield a high-value customer?

Online Sales:

Online Sales When we think of internet marketing, we think of e-commerce web sites
While typically focused on the Internet, Internet marketing can drive sales offline as well
While business to consumer (B2C) sales are hot right now, business to business (B2B) is right behind and 6-10X bigger
B2B has a more complex legacy system, product messaging problem, hence complicating the marketing problem
Many B2B sites require much tighter contact with channel (broker, dealer agreements, etc.)
Marketing is focused at channel and at end-user

Web value propositions:

Personal:

Personal Not just personalized, but personal
Interactive ranging from real-time to asynchronous
Coke Classifieds
Companies can conduct virtual focus groups on their site
Companies can lurk and learn
X-Files Fan Forum Message Board
Demographic personalization
Technographic personalization (www.browsers.com)
User’s internet domain (aol.com, etc)
Browser type and version
Time of visit

Personalization Techniques:

Personalization Techniques Collaborative filtering
System learns associations between items (pages) based on behavior (click stream)
System then pairs content to users based on what other people with similar behavior have done in the past
“Flocking” syndrome
Simple agents
Bayesian networks
Neural Networks (Autonomy)
Rule Based Systems
Cluster Analysis and Rule Based Systems Combinations (Blue Martini)
Fuzzy Logic (NetPerceptions)
Genetic Algorithms (NetPerceptions)

Instantaneous:

Instantaneous News sites (CNN.COM)
Real time or near real time marketing
Personalization engines can learn on the fly
AA Net SAAver Fares program (Timely push)
www.strategy.com for up to the minute stoke quotes pushed via fax, voice-mail, e-mail, pager

Measureable:

Measureable Things you can measure
Click through rates
Web site traffic analysis (click stream)
Data consumption analysis (not the same as click stream!)
Problems
Mirrors, caches, proxy servers can obfuscate measurement
Hits, clicks, visits, page requests, page views may take on different interpretations to different vendors/service providers
Click to purchase relies on cookies which can have problems (multiple users on the same PC, clear cookie cache etc.)

Flexible:

Flexible Database driven sites introduce new levels of flexibility
Marketing campaigns can be revised and altered quickly
Personalization not only tailors the message, but makes for a very flexible medium - users can rearrange home pages (my.yahoo.com)

Interlinked:

Interlinked This is the power of the web
The value of the network increase exponentially with the number of nodes
Surprisingly, many web sites are afraid of so-called exit links (they don’t want people to leave their site - as if they can stop you!)
Aggregators of links - gateway content
Link partnerships, mutual cross-linking
Linking netiquette - can you use someone else’s url without their permission?

Economical:

Economical Obvious
For etailers, the results are simple: web stores sell much more than the BAM counterparts at a great savings
However, marketing costs and construction costs are rising
Reduced clickthrough rate
e-commerce site construction between $1-3 million (Forrester)

Contests, Promotions, Sweepstakes:

Contests, Promotions, Sweepstakes Sweepstakes (see www.sweepstakesonline.com), see Furniture, www.furniture.com
Online chat sweepstakes: users had to be tuned in chat room at a certain time to win (like a radio station sweepstake)
Companies freely donated products to give away
Yahoo history of promotions
Halloween and Valentine’s Day treasure hunts
Live online chats with TB stars, cross-promoted with NBC prime time programming
1996 Find the Y Dilbert sweepstake (The “Y” in Yahoo was missing)
Amazon - Greatest Story Ever Told - John Updike, best submissions won $1,000 and the honor of sharing a byline

Promotions, etc.:

Promotions, etc. Push content, HTML based e-mail
Personalized e-mail
etailer customer survey promotion
Place the url on everything
etailer catalog house had the url on the cover of the catalog. Added it to every page, online sales jumped noticeably
url on e-mails, all off-line promotions and advertising
Events listings
http://events.yahoo.com/

Public Relations:

Public Relations Standard PR techniques, internet distribution
Personalize don’t commoditize
Prioritize news content
Become a source. Target publications/reporters. Plan well ahead of the announcement and drop e-mails or place phone calls.
Contact addresses and editorial calendars are often online
Call reporter before the release is distributed
Know the outlet’s reporting cycle

PR Distribution:

PR Distribution www.PRNewswire.com
www.Businesswire.com
Sending releases to your own e-mail list
Format for e-mail
Don’t use binaries
60 or so characters per line

Paid advertising:

Paid advertising Key issues
CPM/CTR, impressions versus click through
Cost per lead, per click, per sale, CPW
Brand advertising is needs to know CPM
If you are measuring results, CTR is important
Do the math
At averages of $33 per CPM and .5% CTR rate, 1,000 impressions costs $33 and yields 5 click throughs for a cost of $6.60 per CTR
What percent of CTR makes a purchase - 5%?

The debate over banner ads:

The debate over banner ads Some say
Shrinking click through rates
Banner size to small for proper branding
Broadband and rich media still won’t work
Others say
Brand advertising does work with banner ads (1997 IAB Online Advertising Effectiveness study)
Rich media does expand brand presentation capabilities
The future says
The question for most organizations is how do they handle the mix between online and offline advertising
iVillage radio spots and Go network TV spots

Issues around dropping CTR rates:

Issues around dropping CTR rates Some research shows CTR is related to immediacy. Users click on what they need immediately
Perhaps the proliferation of content and dramatic increase of users causes this reduction (or are users tuning out?)
Creative treatment of the banner does make a difference
Nearly all online users use other media
Synergistic effect across media (TV and Web is well known)
Tie ads to keyword searches to improve CTR (e.g., travel agencies advertise on Infoseek for searches that include the word “travel”)
www.MBInteractive.com

Targeted paid advertising :

Targeted paid advertising Demographics
Income, age, geography, family size
Technographics
Browser, domain, user-supplied data
Psychographics
Behavior: click stream, data consumption
Perhaps the present and future is for those organizations that mix and match between different sets of characteristics and different sets of algorithms to achieve better targeting

Spiral Branding:

Spiral Branding Use TV, radio, print drive traffic
Use the web to get the customer involved (content, etc.)
Collect e-mail addresses (sweepstakes?)
Use e-mail to remind them to return to the TV and the Web
Sports channel reminds you to visit
At the site you interact with the fantasy league
The league uses e-mail to remind you of a pre-game show
“Secrets of Spiral Branding” Jesse Berst, ZDNet